Guiel v. Allstate Insurance Co

In Guiel v. Allstate Insurance Co., 170 Vt. 464, 756 A.2d 777 (2000), the insured obtained a damage settlement in connection with an automobile accident. Under her insurance policy, the insurer was subrogated to the insured's right to recover from third parties up to the amount paid out under the insured's medical coverage. After obtaining the settlement, the insured filed a declaratory judgment action requesting that the subrogated insurer pay a proportionate share of the insured's attorney's fees. The Court upheld a lower court judgment granting the requested relief based on the court's conclusion that the insurer sought to benefit from the services of the insured's counsel without paying for them. The subrogation right in Guiel arose out of a commercial transaction in which the insured paid for medical coverage under which she collected. The Court held that a statute that specified required conditions of liability policies, including a condition providing a right of subrogation "to the amount of such payment [of loss or expense under this policy]," did not prevent application of the common fund doctrine requiring the subrogated insurance carrier to pay a pro-rata share of attorney's fees. Guiel, 170 Vt. at 469-70, 756 A.2d at 781. The Court concluded that the language "merely sets a limit on the extent of the right of subrogation and is not intended to preclude application of the common fund doctrine in insurance cases involving subrogation rights." Id. at 470, 756 A.2d at 781.